New Home Construction Cooled by Winter Weather

Ice storms in the Midwest, blizzards in the nation’s capitol and northeast, and a wet El Nino weather pattern out west has brought some wild winter weather across the United States. This arctic chill explains why building construction has been falling this winter.

According to the Commerce Department, new home construction starts fell 4 percent in December to a seasonally adjusted annual rate of 557,000. That’s a drop of 23,000 starts from November. Poor weather conditions reflected construction start declines of 19 percent in the Northeast and Midwest. They were down 1 percent in the West, but actually rose 3 percent in the South.

Applications for new building construction permits rose 11 percent in December to an annual rate of 653,000. That’s the highest level of activity since October 2008.

The January numbers may continue to show a decline as well. Arctic temperatures have gripped the heartland, the eastern seaboard, and even sent temperatures down into the 20’s as far south as Central Florida. In addition, heavy rains have drenched the golden state. Southern California has seen flooding, mudslides, and even tornados as more than five inches of rain has pounded coastal and inland valleys.

Overall, new home construction is down 75 percent from the peak of four years ago. However, it’s up 14 percent from last January when the housing industry hit bottom.

Hopefully the extension of low mortgage rates, falling home prices and the stall in home sales will urge some buyers to act, and we’ll see these numbers turn around as Spring approaches.